Winning The Peace: The Post-Shutdown Challenge

October 16, 2013

Richard Eskow

It’s a major victory. The shutdown has ended, the government isn’t defaulting (at least not yet), and Democrats didn’t yield in the face of threats and bullying. But what happens next could shape our fate for many years to come.

Congratulations are in order. President Obama vowed not to negotiate over the debt ceiling, and he was as good as his word. He stood up to the closet ideologues of the artificial “center,” the ones who unwisely argued that being the “adult in the room” meant surrendering to the tantrums of children.

Sen. Harry Reid’s tough talk was matched by equally tough action. (Reid also deserves credit for coining the phrase “banana Republicans,” as pithy a summation of their approach to governance as we’ve seen.)

Once and Future Losses

But the celebrations are premature. Yes, the public is furious at Republicans – Tea Partiers and plain-vanilla GOP extremists alike – for causing so much damage in pursuit of an ideology so far outside the political mainstream. Most Americans have rejected the things Republicans stand for: their values, their priorities and their apocalyptic economic vision.

And yet, unless something changes, this deal will bend the next few months’ deliberations along the same misguided lines that have guided our political discourse for years now. House and Senate members will be encouraged to come up with a “deficit reduction plan” – in other words, to impose another round of cuts just like those which have already wounded the economy and shredded millions of jobs.

That’s hardly cause for celebration. The conservative Peter G. Peterson Foundation estimates that the “crisis driven fiscal policy” of the past several years has resulted in the loss of 900,000 jobs. Discretionary cuts of the kind that will be urged upon Congress have already cost us 1.2 million jobs, according to the study, and have resulted in a loss of 0.7 percent from the GDP.

Remember, these estimates are on the conservative end.

This pointless and futile round of threats has cost the economy significant losses in both consumer confidence and business investment. That’s not just our conclusion. It’s also what a visiting panel from Wall Street told the House Financial Services Committee earlier this week. The shutdown has cost our economy $24 billion and lowered the GDP by 0.6 percent, according to an analysis by Standard & Poor’s.

Yes, there will be talk about “increasing tax revenue.” But it won’t focus on raising the top tax rates for millionaires and billionaires, even though the generally conservative International Monetary Fund recently proposed raising top tax rates to pre-Reagan levels. In this country, that would mean nearly doubling the top tax rate from its current 39.5 percent to 73 or 74 percent.

(We discussed this topic on the Thom Hartmann show yesterday.)

Lawmakers are more likely to discuss limiting tax deductions and exclusions – “tax expenditures,” in Beltway parlance. And the “expenditures” they’re likely to target include the deductions that are currently keeping the struggling middle class afloat, like health expenses, mortgage interest, and child care tax credits.

There will also be talk of “tax reform,” but it will most likely focus on tax code tinkering designed to lock in today’s historically – and unfairly – low rates of taxation for corporations and very high earning individuals. That’s not “reform”: it’s a payoff to big campaign contributors.

Unkindest Cuts

Then, as it always does, the discussion will turn to spending cuts. That’s hardly a novel development in our political dialogue. In fact, it seems to be all anyone has been talking about for years.

The pro-corporate and pro-billionaire lobbying group Fix the Debt said in a press release today that deficit spending “is letting a fire burn that could get out of control at any moment.” As usual they have it precisely backward. Recent data shows that the deficit is falling rapidly, while jobs and wages remain stagnant. Recession is the fire that’s burning, eating up jobs, prosperity, opportunity, and most of the middle class. Government spending is still needed to put the fire out.

Worrying about deficits in this kind of economy is like worrying about water conservation when your house is on fire.

And yet, that is almost certainly where the talks mandated by this deal will take us – unless people demand a more constructive agenda. And while the talks continue, the destructive spending cuts known as “sequestration” will be extended, costing Americans in both jobs in dollars.

Republican Hands Off My Medicare!

Then the negotiators are almost certainly going to turn to the most prized target of all, the holy grail of budget cuts that “bipartisan” corporate politicians have been seeking for years: Medicare and Social Security. That would be devastating to millions of disabled and elderly Americans, now and in the future.

These cuts would be especially devastating to today’s young Americans, whom corporate lobbyists (and the ever-execrable Tom Friedman) would hoodwink us into believing they would somehow be cheated if we safeguard the social safety net so that it will be there when they need it.

It’s important to remember that this insurrection against our constitutional form of government was not conducted by “renegades” within the Republican Party, as so many pundits and party officials would have us believe. If that were the case, House Speaker John Boehner could have put a clean resolution to a vote and ended the shutdown on Day One. The party’s Senate “moderates” could have promptly ended Texas Sen. Ted Cruz’s mock filibuster, sparing both the nation and the senator a considerable degree of embarrassment.

This wasn’t the work of the Tea Party. This was the work of the Republican Party.

Their plan all along has been to parlay their stunning 2012 electoral loss into a series of legislative wins through the use of threats, drastic actions – and, yes, “hostage-taking.” Their intention from the very beginning was to snatch victory from the jaws of defeat.

The question now is: Can Democrats avoid snatching defeat from the jaws of victory?

Elements of Victory

Democrats win when they fight for Medicare, Social Security and the middle class. That leads to economic victories. But Dems will face powerful inducements in coming months to compromise with the austerity economics crowd by agreeing to a menu of further spending cuts, destructive entitlement “reform,” and tax-code tinkering that starves the government of needed revenue while protecting corporations and the wealthy.

Elected officials will need to hear from a mobilized public if we are to escape the grim and destructive debate they’ve planned for us. Our political discourse needs to shift away from deficit mania and toward those policies the public wants and needs. They include:

Truly progressive tax reform, in which the wealthy and corporations pay their fair share;

The shutdown struggle appears to be ending – for now. Now let’s hope our leaders are as committed to winning the peace as they were to winning the war, because under this deal we know one thing for certain: unless we do something, three months from now we’ll be going through this whole charade again.

During the Cold War they used to say that if we fight the next war with nuclear weapons, we’ll fight the one after that with sticks and rocks. The Republicans must be made to understand that the “nuclear weapons” of shutdowns and debt crises can never be used again. And our economic debate must turn away from policies that would leave us all holding nothing but sticks and rocks.